KEY DRIVERS OF OFFSHORE RENEWABLE DEVELOPMENT
Climate change is one of the greatest threats of this century and is already affecting many regions around the globe. Such impacts are driven by rising GHG emissions, especially from the energy sector, which is responsible for two-thirds of the global total (IRENA, 2019a). Therefore, energy systems worldwide need to transition to renewable and clean energy sources and to undergo radical changes, driven by a combination of technological breakthroughs, the need to provide affordable energy sources and the pressing need to put an end to climate change. To transform the energy sector, a shift towards renewable energy sources is required. The world’s oceans are a source of abundant renewable energy, which can be tapped by offshore renewables – including offshore wind (with fixed and floating foundations, or airborne), floating solar photovoltaics (PV) and various forms of emerging ocean energy technologies – to decarbonise the energy sector. The benefits of offshore renewables go beyond the energy sector, as the energy harnessed from oceans has the potential to drive a vigorous global blue economy for a variety of end-use applications, including shipping, cooling, aquaculture and water desalination, among others. Offshore renewables are expected to provide significant socio-economic benefits and to improve the livelihoods of islands, and especially small island developing states (SIDS) and least developed countries (LDCs) through job creation, local value chains and enhanced synergies among the different blue economy actors.
KEY CHALLENGES OF OFFSHORE RENEWABLE COMMERCIALISATION
Despite the noticeable potential and various benefits, offshore renewables are emerging technologies with varying degrees of maturity. Offshore wind power is the most mature technology and is already commercialised, while ocean energy technologies are still in the research, development and demonstration (RD&D) phases. Because these technologies are immature, they are bound to face a series of challenges that could encumber the commercialisation that would realise their full potential. Offshore renewables will be located mostly in harsh environmental conditions, and in areas with almost non-existent power grids. This corresponds to high capital costs and electricity prices. The limited established supply chains and low costcompetitiveness with other mature renewable energy sources, in addition to the lack of regulatory frameworks and inclusion in national policies, creates a gap to commercialisation. Such barriers have adverse effects on social awareness of offshore renewables, which shapes both the public and investors’ trust in these technologies.
TECHNOLOGY STATUS AND OUTLOOK
Due to its offshore location, its high energy output per square metre and its ability to be built up quickly at gigawatt-scale, offshore wind is a valuable option to provide electricity to densely populated coastal areas in a cost-effective manner. Developments in turbine technologies as well as in foundations, installation, access, operation and system integration have made possible the move into deeper waters and farther from shore, in order to reach sites with greater energy potential. Over the past 5-10 years, offshore wind has reached maturity, making it the most advanced technology among offshore renewables (IRENA, 2019b).
Offshore wind with fixed foundations
Offshore wind farms with fixed foundations are the most common type of installation, with nearly 34 GW of cumulative installed capacity by the end of 2019 (IRENA, 2019b); they are also by far the most mature of the offshore renewables technologies. Such turbines, as a result of R&D, are being routinely deployed in water depths of up to 40 metres, and in some cases up to 60 metres, and at up to 80 kilometres’ distance from shore. A variety of fixed offshore wind turbines have been developed over time, with the most common types being gravity-based foundations, monopile foundations, tripod foundations and jacket foundations, as shown in Figure 7.
Offshore wind with floating foundations
Floating wind farms are one of the recent developments in offshore renewable energy technologies and offer several opportunities. In contrast to the fixed offshore wind farms that are limited to shallow water depths, floating foundations enable access to waters more than 60 metres deep. In addition, they facilitate setting up turbines even for mid-depth sites (30-50 metres), which could potentially become a lower-cost alternative to wind farms with fixed foundations (IRENA, 2016b). Another advantage is the reduced activity on the seabed during the installation phase, which lowers the impact on marine life (IRENA, 2019b).
MARKET STATUS AND OUTLOOK
The first commercial-scale offshore wind farm came into operation in 2002 in Denmark with a capacity of 160 MW. Since then, global installed offshore wind capacities have spiked rapidly over the past two decades. By the end of 2020, the overall installed capacity of offshore wind was around 34 GW (IRENA, n.d.), which represents a more than 10-fold increase from 2010, as shown in Figure 13. To date, the world’s largest offshore wind farm is the UK’s Hornsea 1, with 1.12 GW of capacity (Shin, 2021).
Offshore wind has the potential to play a pivotal role in achieving renewable energy targets in many countries around the globe. Over the past two decades, Belgium, China, Denmark, Germany and the UK were the leading countries in offshore energy deployment in the global market. In terms of new offshore wind installations, China and the UK have been leading this trend since 2018 and are expected to grow even further (Fortune Business Insights, 2019); this in turn will lead to growing jobs and benefits domestically. In 2020, China recorded the highest offshore wind installations with more than 3 GW of installed capacity, followed by the Netherlands with 1.5 GW, Belgium with 0.7 GW and the UK with 0.4 GW. To date, around 90% of the global installed offshore capacity is commissioned in the North Sea and nearby Atlantic Ocean (IRENA, 2019b).
The global weighted average levelised cost of electricity (LCOE) for offshore wind has decreased overall, from USD 0.162/kWh in 2010 to USD 0.084/kWh by 2020. However, the LCOE increased between 2010 and 2014 as projects started shifting more into deeper waters, reaching a peak of USD 0.171/kWh in 2011 and USD 0.165/kWh in 2014, followed by a sharp decline to 2020, as shown in Figure 17. The LCOE for offshore wind decreased sharply in frontrunner countries, with the lowest weighted average LCOE reported in China at USD 0.084/kWh in 2020 followed by Germany and the UK. Table 4 highlights the declining LCOE trends for the frontrunners between 2010 and 2020.
OFFSHORE WIND AND GREEN HYDROGEN
Of the emerging trends discussed above, the production of green hydrogen using offshore wind electricity is an innovative business model that received the most attention in 2020. Future developments of offshore wind are witnessing a coupling with hydrogen production through electrolysers, and more than a dozen projects have been proposed since 2019. Such projects are attracting global interest, and from the total pipeline of planned projects of more than 200 GW, at least 17 GW of projects coupled with offshore wind have already been proposed, mainly in Europe. This capacity holds a share of 53% of the overall announced electrolysis projects from various electricity sources (BloombergNEF, 2021). The near- or medium-term pipeline of electrolysis projects powered by offshore wind (2021-2035) is dominated by countries in north-western Europe, namely Germany with 10 GW, followed by the Netherlands with 4.3 GW, Denmark with 2.3 GW and the UK with 112 MW. The AquaVentus consortium in Germany, with a capacity of 10 GW, is the largest planned project followed by NortH2 and Massvlakte 2 in the Netherlands with capacities of 200 MW each (BloombergNEF, 2021). The AquaVentus project highlights the importance of cross-country co-operation to maximise wind yields and enhance coupling opportunities with enabling technologies.
TECHNOLOGY STATUS AND OUTLOOK
Ocean energy technologies are niche and emerging technologies with the potential to power coastal communities, as well as to drive a blue economy. Globally, 40% of the population, around 2.4 billion people, live within 100 kilometres from the coast (UN, 2017). Those communities are in need of various economic activities and reliable power sources, which can be provided by predictable ocean energy
technologies as a baseload source. Moreover, ocean energy technologies could facilitate the integration of variable renewable energy sources such as solar PV and wind. Generally, ocean energy technologies are categorised based on the source used for power generation. For instance, tidal stream and tidal barrage are referred to when tidal energy is used, whereas the term wave energy is used when power is
produced from ocean waves. Other sources that harness energy from temperature difference or salinity difference are ocean thermal energy conversion (OTEC) and salinity gradient, respectively. Ocean energy holds an abundance of untapped resource potential that could meet the current global electricity demand and the projected demand well into the future. The theoretical potential differs greatly among different technologies (Figure 20). Based on IRENA’s analysis, the global cumulative resource potential
ranges from 45 000 terawatt-hours (TWh) to well above 130 000 TWh annually (IRENA, 2020d). Therefore, ocean energy alone has the potential to meet more than twice the current global electricity demand. Currently, most ocean energy technologies have not reached commercialisation and are still in developmental stages, with the majority of technologies being in the prototype phase with the exception of some reaching early commercialisation. The growth in the ocean energy sector has been slower than expected. However, the past decade has witnessed noticeable progress in tidal and wave energy. As shown in Figure 21, the current global cumulative installed capacity across all ocean energy technologies is more than 515 MW.
Wave energy is mainly influenced by the wave height, wave speed, wavelength (or frequency) and wave density, and such characteristics are most powerful in latitudes between 30 degrees and 60 degrees and in deep water (greater than 40 metres). Although waves vary seasonally and in the short term, they are
considered a reliable source of energy as they can be forecasted in the future with a significant degree of accuracy. Wave energy resources are better distributed than those of tidal energy resources. This can be seen directly in their huge resource potential of around 29 000 TWh annually, which would be capable of meeting the current global electricity demand (Mørk et al., 2010). Unlike offshore wind, wave energy technologies have not witnessed a convergence towards one type of design, but rather different types of technologies are being pursued. Historically, three main working principles to harness energy from waves have been developed: oscillating water columns, oscillating bodies and overtopping devices (IRENA, 2014a). Figure 23 provides an overview of the different wave energy technologies.
MARKET STATUS AND OUTLOOK
Ocean energy technologies are being developed and pursued globally in 31 countries. However, despite the global presence, only a few countries are at the forefront of the ocean energy market, namely European countries such as Finland, France, Ireland, Italy, Portugal, Spain, Sweden and the UK, in addition to Australia, Canada and the USA. These countries hold the largest number of projects tested, deployed and planned as well as the most project developers and device manufacturers. Although the majority of ocean energy technologies are in the RD&D stages, an increasing number of companies, research institutes, universities and investors are showing interest in ocean energy technologies and are allocating resources to further develop them and to increase the installed capacity in the coming years.
For example, the cumulative capacity of planned ocean energy projects, with the exclusion of tidal barrage projects, is around 3 GW (Figure 25). The breakdown by technology of the projected capacities for tidal stream and wave energy, including the number of projects in the pipeline and the number of developers involved, is shown in Figure 26.
For wave energy, around 9 operational projects with a total capacity of around 2.3 MW were deployed globally across 8 countries and 3 continents. The projects are relatively small in capacity, with only one project with an installed capacity that exceeds 1 MW deployed in late 2020 (in Hawaii). The majority of wave energy projects were developed in European waters. However, some were installed as demonstration projects and only stayed in the water for a few months. For example, the UK has deployed the most projects, but none of these were operational by the end of 2020. Other ocean energy technologies, such as OTEC and salinity gradient, are far less mature and still in the R&D and conceptual phases. Thus, their market actors are not commercial but rather research institutes and universities.
Since ocean energy technologies are still at relatively early life-cycle stages, their LCOEs are uncertain and are difficult to estimate with accuracy. Currently, the LCOE for tidal energy is estimated between USD 0.20/kWh and USD 0.45/kWh and for wave energy between USD 0.30/kWh and USD 0.55/kWh. Figure 29 provides cost estimate projections and targets based on technology deployment. Although current estimates are still not competitive with conventional energy and with mature renewable energy sources such as ground-mounted solar PV and onshore wind, recent estimates by developers with active projects show that costs may be lower. For instance, the LCOE of tidal energy is expected to reach USD 0.11/kWh between 2022 and the early 2030s, whereas wave energy will experience a lag of five years and is expected to reach USD 0.22/kWh by 2025 and USD 0.165/kWh by 2030 (European Commission, 2016; Magagna, 2019a; ORE Catapult, 2018). Small island developing states (SIDS) are positioned to be the main benefactors of ocean energy technologies, where ocean energy would compete with diesel imports. Thus, these technologies could reach grid parity first.
FLOATING SOLAR PV
TECHNOLOGY STATUS AND OUTLOOK
Floating solar PV (FPV) is a fast-emerging technology with a high potential for rapid growth. FPV panels, by definition, are mounted on buoyant platforms or membranes on a body of water without being fixed on piles or bridges. Floating solar PV, either on freshwater or on seawater, can be considered as the third pillar of the global PV market alongside ground-mounted and rooftop solar PV, due to the increasing demand for such a technology, especially for countries with limited land availability such as densely populated countries and islands (IRENA, 2020a).
CROSS-CUTTING CONSIDERATIONS FOR OFFSHORE RENEWABLES
MARINE SPATIAL PLANNING
In response to the increased use of ocean resources due to technological advancements and competitiveness in different economic sectors, governments need to establish frameworks and plans on how to best govern the use of their seas among different actors. Marine spatial planning (MSP) brings together all ocean users from energy, industry, government, regulations, conservation, protection
and recreation to formulate best practices and come up with optimal decisions on how to efficiently use marine resources. A variety of marine spatial plans globally are being developed, and good practices
are emerging in different regions. However, good practice in a certain region is not necessarily applicable to another region; therefore the Intergovernmental Oceanographic Commission of the United Nations Educational, Scientific and Cultural Organization (UNESCO) published a step-by step guide to MSP (see Figure 31).
Belgium was a pioneer in integrating offshore wind in MSP, with its 2014-2020 marine spatial plan allocating 7% of the country’s territorial waters for the development and deployment of offshore wind. Furthermore, Belgium’s new marine spatial plan for the years 2020-2026 provides a useful example on how the country unlocked a 2 GW offshore wind potential in a densely crowded sea area through a multiple-use approach. Other European countries, such as Germany and Finland, have also managed to unlock large potential allocation of their territorial waters. Germany has allocated 20 GW of priority areas for offshore wind deployment but is still undergoing the final consultation phase of its marine spatial plan, which is expected to be submitted by September 2021. Finland allocated around 15 GW of offshore wind in its 2020 marine spatial plan; however, national defence requirements might set important limitations (WindEurope, 2021).
CONTRIBUTION TO THE ENERGY TRANSITION
DECARBONISING THE POWER SYSTEM BY COMBINING OFFSHORE RENEWABLES
WITH OTHER RENEWABLE TECHNOLOGIES
Energy harnessed from oceans, through offshore renewables, can contribute to the decarbonisation of the power sector and other end-user applications relevant for a blue economy – for example, shipping, cooling, aquaculture and water desalination, in addition to the conventional oil and gas sector. More importantly, the predictability of power generation from ocean energy technologies complements the variable character of solar PV and wind (both on- and offshore), which makes them suitable to provide steady baseload power. Combined-technology electricity generating systems is a novel business model that does not view the individual offshore renewable power generating technologies as stand-alone, but rather combines them to reap synergies among them, especially when coupled with storage. Examples of projects being researched, planned or implemented are provided in Table 7.
RECOMMENDED ACTIONS TO COMMERCIALISE OFFSHORE RENEWABLES
Issue 1. Ocean governance and international co-operation Sharing the oceans is becoming more prominent with increased focus on the blue economy. More than two-thirds of the oceans are not governed by specific national governments but are part of the so-called global commons (Ocean Unite,
2019). This leaves much room for uncertainties that can lead to ownership disputes among communities, countries and sectors, particularly in areas where fisheries, conservation, shipping and defence are already in place. To overcome the offshore governance uncertainties, international co-operation can help.